Nobel laureate Paul Krugman on Saturday warned that India may end up with mass unemployment if its manufacturing sector does not grow, News18 reported. The American economist was speaking at an event that the news channel had organised.

“As the world’s economies took off because of growth in the manufacturing sector, India stood apart and unique,” Krugman noted. “It exported services, which was unprecedented.” The economist observed that India’s demographic dividend puts it at an advantage.

“India’s lack in the manufacturing sector could work against it, as it does not have the jobs essential to sustain the projected growth in demography,” Krugman said. “You have to find jobs for people.”

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The economist cited the examples of Japan and China to emphasise his point. “Japan is no longer a superpower because its working-age population declined, and China is looking the same. In Asia, India could take the lead but only if it also develops its manufacturing sector, not only the services one.”

India has achieved much more economic growth in 30 years than what Britain had achieved in 150 years, Krugman said, adding that a high level of income inequality has cancelled out the advantage of such growth.

The noted economist said he was hopeful about India’s growth because of the size of the labour force that can speak English, and its services-based approach, but warned that artificial intelligence might prove to be an obstacle. “There is this concept called artificial intelligence that you should be wary of,” Krugman said, according to The Economic Times. “In future, while diagnosis may be outsourced to a doctor in India, it could also go to a firm based on artificial intelligence. Things like this could be a cause for worry for Indian services sector.”